‘Yay’ or ‘Nay’
Though voters in and around San Diego, California; Charleston, South Carolina; Little Rock, Arkansas, and elsewhere voted against sales tax measures, sales tax increases did get the Election Day green light in many parts of the country, often with specified funding purposes:
- Los Angeles County raised the sales tax supporting homelessness services from 0.25% to 0.5%, with revenue going to affordable housing, mental health and addiction treatment, and services to children, families, veterans, domestic violence survivors, seniors and disabled homeless.
- The city of Sonoma, California, voted in measures for city services and childcare programs that will raise the overall sales tax rate from 9% to10.25%.
- Denver passed one of two proposed sales tax increases, a 0.34% bump to fund healthcare.
- Columbus, Ohio, voted to raise its local sales tax one-half percent to fund transportation and transportation infrastructure.
- Nashville, Tennessee, voters approved a county half-cent hike on sales tax to fund transportation improvements.
- Spokane, Washington, voted to raise sales tax 0.1% – exempting some items like groceries and medicine – to raise an estimated $7.7 million annually for local government spending.
- Nevada passed a sales tax exemption for child and adult diapers.
It’s Beginning to Look a Lot Like Sales Tax
Florida has issued sales tax guidance for non-permanent holiday decorations, attributing it to a lack of awareness among some businesses.
Businesses that sell or rent holiday lighting or decorations are required to collect sales tax on the total sales or rental price, including charges for design, labor, and services to install or remove the decorations and lighting. This applies to the entire transaction, covering both the sale or rental of the items and any associated services.
However, charges for labor or services to install and remove customer-owned decorations and lighting are not subject to sales tax if the business providing the services does not supply any tangible items, such as light clips, adhesive, nails, screws, or extension cords. Similarly, charges solely for removing customer-owned decorations and lighting, when the business did not originally install them, are also exempt from sales tax. Additional details and exemptions may apply.
Lease is More
As of January 1, Illinois and Maine will begin taxing each periodic lease or rental payment made for the lease or rental of tangible personal property (TPP). Both states currently charge sales or use tax upfront to the lessor based on the acquisition cost of the leased or rented TPP, rather than imposing sales tax on periodic payments to the rental customer, which is common in other states.
In addition, both Illinois and Maine have revised their sourcing rules for leases. Illinois will source leases with recurring periodic payments to the primary property location. For leases without recurring payments or where the lessee takes possession of the property at the lessor’s place of business, the same sourcing rules as sales of TPP under the Illinois Retailer’s Occupation Tax (ROT) will apply. Maine adopts a similar approach, sourcing the first payment for leases with recurring periodic payments based on general retail sales sourcing rules, while subsequent payments are sourced to the "primary property location."
The transition period for these changes varies between the two states. Illinois will continue to allow the use of an existing credit allowed when rental inventory already taxed upfront is sold, while Maine offers a refund option. Illinois exempts autos, titled property, certain licensed software, and property subject to Chicago’s personal property lease transaction tax from the new rules.
